Press Release

JCR-VIS Re-affirms Entity Ratings of Indus Dyeing & Manufacturing Company Limited

Karachi, August 28, 2009: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the medium to long-term entity rating of A (Single A) and short-term rating of A-2 (A Two) assigned to Indus Dyeing & Manufacturing Company Ltd. (IDMCL). The outlook on the medium to long-term rating is ‘Stable’.

In the past two years, operating environment has remained challenging for the textile industry. Lower gross margins have constrained the debt-servicing capacity of certain industry players, evident by the growth in non performing loans emanating from the textile sector. In spite of the stress on the sector, IDMCL has shown resilience, registering improvement in profitability indicators in FY09 compared to the preceding year; though profitability is still lower than that achieved in FY07.

To mitigate pressure on gross margin in 9M09, attributable to decline in international prices of yarn on account of global recessionary conditions, the company tailored its production mix to cater to local demand, with local sales prices exhibiting an increasing trend. The company has a diversified customer base, including international and local clients.

Nevertheless, operating cash flows of the company had been adversely impacted to some extent during 9M09, which may necessitate external liquidity arrangements to meet a proportion of the debt-servicing requirement for the next year. At the end of 3Q09, leverage of the company was prudent in view of the industry’s prevailing risk dynamics.

For further information on this rating announcement, please contact Mr. Safdar Kazi (Ext. 501) or Ms. Sabeen Saleem (Ext. 510) at 021-5311861-70 or fax to 021-5311872.

Faheem Ahmed
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2009 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited